Ford's Plan To Build A Car Almost No One Will Buy Is Actually Very Smart

We encountered a curious horse while testing out the very fun Ford Fiesta ST.
Alex Davies / Business Insider
Almost no one will by Ford's Fiesta ST, the performance version of its little hatchback, which is priced several thousand dollars higher than the standard Fiesta.

But that's part of Ford's plan for the Fiesta lineup, and a smart move for the company.

The ST delivers 197 horsepower and 202 lb-ft of torque, which is more than enough. It comes only as a manual, which makes it more fun.

We recently tested the ST and it's genuinely a pleasure to drive, at least on open, winding roads. We do think most drivers would get tired of the confining, racecar-style Recaro seats and manual shifting during everyday, traffic-ridden driving.

The Market

The ST starts at $21,400. The model we tested cost $24,985 (including destination and delivery charges). It's available in dealerships now.

But Ford expects the ST will make up just 4% to 5% of all Fiesta sales, a tiny rate. The key demographic is the "tuner crowd," young men who want to emulate rally driver Ken Block's "Gymkhana" videos (filmed in a modified Fiesta).

Through August, Ford had sold 52,575 Fiestas in the U.S. (a significant rise over 2012 numbers). If that rate holds, it should move nearly 79,000 off the lots by the end of the year. So even if the ST hits the most optimistic 6% mark, fewer than 5,000 will be purchased. 5,000, out of millions of cars Ford sells to Americans every year.

So why bother building a car it knows will appeal to so few buyers? There are two key benefits to the ST's market presence.

Building Up The Brand

Liz Elser, the marketing manager for the ST, told Business Insider that the performance variant of the car "absolutely" offers benefits for the entire lineup, even if it accounts for few sales. When Ford did the same thing with the Focus ST, it was a "great way to reinvigorate the Ford brand," she said, noting that the ST brings in conquest customers.

Karl Brauer, a senior analyst at Kelly Blue Book, agreed that building the ST is a way to "pump brand equity" into the Fiesta, which "definitely validates the structure and model line as a potential performance version."

The fact that the Fiesta ST exists makes other Fiestas seem cooler.

Dominating A Tiny Market

The second upside for Ford is that it's nearly alone in this market. Fiesta competitors like the Nissan Versa, Kia Rio, and Hyundai Accent don't offer performance versions. There is the Chevy Sonic RS, which start for $405 less, but is heavier and less powerful.

It's a tiny market. The buyers who can afford real performance cars won't buy little Fords, while those who want an affordable car won't spend thousands extra for a sporty version. Potential Fiesta ST customers are just a "sliver" of the overall market, Brauer said.

But that doesn't matter. Because the Fiesta ST is "kind of a lone proposition," Ford can reap all of the (albeit meager) profits. If everyone offered a $21,000 performance hatchback, each would get so few customers that it wouldn't be worth it for anyone.

Perhaps, Brauer said, if Ford makes a ton of money and the market turns out to be strong, others will jump in. But that's a long shot, and Ford will likely scoop up the few, but profitable, customers looking for a car like the Fiesta ST.